Business Corporations and Limited Liability Companies Principal Forms of Business Organizations:

Sole Proprietorship: A business owned and operated by one person. The proprietor supplies capital and manages the business, makes all decisions, retains all profits, bears all losses, and is personally liable for the debts of the business.

General Business Partnership: An association of two or more persons as co owners to carry on a business for profit. Each partner contributes money, property, labor, and skill to the partnership, is entitled to a proportionate share of the profits, and is personally responsible for losses. Profits are taxed whether or not withdrawn by partners.

Corporation: A separate legal entity organized for business purposes. It is owned by shareholders who elect a board of directors to manage. It is a separate entity, can sue and be sued, enter into contracts, own property in its corporate name. Shareholders and officers generally are not liable for debts, in absence of fraud or disregard of corporate formalities.

Limited Liability Company: An entity taxed like a partnership, but whose owners have limited liability as if they were stockholders of a corporation. The owners manage the business pursuant to an Operating Agreement.